Inspections, Compliance, Enforcement, and Criminal Investigations
[Federal Register: December 5, 1994]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. 93N-0252]
Atul Shah; Denial of Hearing; Final Debarment Order
AGENCY: Food and Drug Administration, HHS.
SUMMARY: The Food and Drug Administration (FDA) denying Dr. Atul Shah's request for a hearing and is issuing a final order under the Federal Food, Drug, and Cosmetic Act (the act) permanently debarring Dr. Atul Shah, 20 Hampton Hollow Dr., Millstone Township, NJ 08535, from providing services in any capacity to a person that has an approved or pending drug product application. FDA bases this order on a finding that Dr. Shah was convicted of a felony under Federal law for conduct relating to the development or approval, including the process for development or approval, of a drug product, and relating to the regulation of a drug product under the act.
EFFECTIVE DATE: December 5, 1994.
ADDRESSES: Application for termination of debarment to the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Megan L. Foster, Center for Drug
Evaluation and Research (HFD-366), Food and Drug Administration, 7500
Standish Pl., Rockville, MD 20855, 301-594-2041.
- Dr. Shah's Arguments in Support of a Hearing
- Mandatory Versus Permissive Debarment
- The Ex Post Facto Clause
- The Double Jeopardy Clause
- Due Process
- Findings and Order
Dr. Atul Shah, the former Director of Analytical Research and Development at Par Pharmaceutical, Inc. (Par), pled guilty and was sentenced on March 5, 1993, for making a false declaration to a grand jury, a felony offense under 18 U.S.C. 1623. The basis for this conviction was Dr. Shah's false claim during his testimony before the Special Grand Jury for the United States District Court for the District of Maryland that he could not remember that the pilot batch for one of Par's generic drug products had been taken off accelerated stability testing and then put back on stability testing. In fact, Dr. Shah did remember during this testimony that the initial pilot batch had failed accelerated stability testing, and that a new formulation of that product had been put back on accelerated stability testing. This testimony was material to the grand jury's investigation because Par had filed a false abbreviated new drug application that failed to disclose that the pilot batch had failed stability testing.
In a certified letter received by Dr. Shah on August 11, 1993, the Deputy Commissioner for Operations offered Dr. Shah an opportunity for a hearing on the agency's proposal to issue an order under section 306(a) of the act debarring Dr. Shah from providing services in any capacity to a person that has an approved or pending drug product application. FDA based the proposal to debar Dr. Shah on its finding that he had been convicted of a felony under Federal law for conduct relating to the development, approval, and regulation of Par's drug products.
The certified letter also informed Dr. Shah that his request for a hearing could not rest upon mere allegations or denials but must present specific facts showing that there was a genuine and substantial issue of fact requiring a hearing. The letter also notified Dr. Shah that if it conclusively appeared from the face of the information and factual analyses in his request for a hearing that there was no genuine and substantial issue of fact which precluded the order of debarment, FDA would enter summary judgment against him and deny his request for a hearing.
In a letter dated August 25, 1993, Dr. Shah requested a hearing, and in a letter dated October 8, 1993, Dr. Shah submitted arguments and information in support of his hearing request. In his request for a hearing, Dr. Shah acknowledges that he was convicted of a felony under Federal law as alleged by FDA. However, Dr. Shah argues that FDA's findings based on that conviction are incorrect and that the agency's proposal to debar him is unconstitutional.
The Interim Deputy Commissioner for Operations has considered Dr. Shah's arguments and concludes that they are unpersuasive and fail to raise a genuine and substantial issue of fact requiring a hearing. Moreover, the legal arguments that Dr. Shah offers do not create a basis for a hearing (see 21 CFR 12.24(b)(1)). Dr. Shah's arguments are discussed below.
Dr. Shah first argues that mandatory debarment is inapplicable to his case. He states that his false testimony subjects him to permissive rather than mandatory debarment because his conduct underlying his conviction does not relate to the development, approval, or regulation of a drug product. Dr. Shah claims that his testimony ``pertained'' to stability testing, but did not ``relate'' to stability testing.
This argument is unconvincing and fails to raise a genuine and substantial issue of fact. Section 306(a)(2)(A) of the act (21 U.S.C. 335a(a)(2)(A)) requires debarment of an individual if FDA finds that the individual has been convicted of a felony under Federal law for conduct relating to the development or approval, including the process for development or approval, of any drug product. The statutory language, ``relating to the development or approval * * *,'' by definition, encompasses all things that are logically connected with the development or approval of a drug product (see Webster's Collegiate Dictionary, Merriam-Webster Inc., Springfield, MA, 1990, ``relate'').
Dr. Shah's act of falsely testifying before the grand jury concerning his knowledge about the stability testing used to support approval of a Par drug product is clearly connected to the development or approval of a drug product. Stability testing is an essential step in the development and approval of a generic drug product.
Dr. Shah argues that he left Par long before his grand jury testimony and, thus, this testimony could not have interfered with the drug development and approval process. Whether or not Dr. Shah was employed by Par at the time of his testimony is irrelevant. Dr. Shah's testimony concerned, or was related to, FDA's approval of a Par drug product, because it pertained to stability testing used to support approval of that drug product.
Section 306(a)(2)(B) of the act requires debarment of an individual if FDA finds that the individual has been convicted of a felony under Federal law for conduct relating to the regulation of any drug product under the act. Dr. Shah's conviction is related to the regulation of a drug product in that it concerns matters that affect FDA's regulatory decisions about drug products. Dr. Shaw's testimony concerns information related to the stability of a drug product. FDA uses such information to determine, among other things, whether to approve a drug, whether to remove a drug from the market, whether labeling changes are necessary, and whether approved marketing conditions need to be altered. The act does not require that Dr. Shah's testimony regarding stability testing directly affect FDA's regulatory decisions. Rather, it need only relate to FDA's regulation of a drug product.
Dr. Shah contends that grand jury investigations have nothing to do with the development and approval of a drug product. He additionally states that the grand jury process is not a means by which FDA regulates a company's drug products. To the contrary, FDA often requests grand jury investigations to explore criminal activity involving matters under the jurisdiction of FDA. Dr. Shah's crime of lying before a grand jury relates to FDA's regulatory powers because it interferes with the inquiry into criminal activity concerning drug applications. Because his false declarations concerned matters relating to the development, approval, and regulation of a drug product, Dr. Shah's mandatory debarment is appropriate.
Dr. Shah also argues that the legislative history of the act indicates that mandatory debarment is inapplicable in this case because his crime did not ``corrupt'' or ``directly involve'' the approval process. As mentioned above, Dr. Shah's crime is one that does corrupt or perpetuate corruption of the FDA approval process because it interfered with an investigation into criminal activity concerning information used by FDA in deciding drug approval and other drug regulatory issues. Whether the crime ``directly involves'' the approval process is not the standard set forth in the statute for mandatory debarment; ``directly involves'' does not have the same meaning as ``relates to.''
Dr. Shah also argues that the ex post facto clause of the U.S. Constitution prohibits application of section 306(a)(2) of the act to him because this section was not in effect at the time of Dr. Shah's criminal conduct. With the enactment of the Generic Drug Enforcement Act (GDEA) on May 13, 1992, Congress amended the Federal Food, Drug, and Cosmetic Act to include section 306(a)(2).
An ex post facto law is one that reaches back to punish acts that occurred before enactment of the law or that adds a new punishment to one that was in effect when the crime was committed. (Ex Parte Garland, 4 Wall. 333, 377, 18 L. Ed. 366 (1866); Collins v. Youngblood, 110 S.Ct. 2715 (1990).)
Dr. Shah's claim that application of the mandatory debarment provisions of the act is prohibited by the ex post facto clause is unpersuasive. Because the intent behind debarment under section 306(a)(2) of the act is remedial rather than punitive, this section does not violate the ex post facto clause.
The congressional intent with respect to actions under section 306(a)(2) of the act is clearly remedial. Congress created the GDEA in response to findings of fraud and corruption in the generic drug industry. Both the language of the GDEA itself and its legislative history reveal that the purpose of the debarment provisions set forth in the GDEA is ``to restore and ensure the integrity of the ANDA approval process and to protect the public health.'' (See section 1, Pub. L. 102-282, The Generic Drug Enforcement Act of 1992.) This is a remedial rather than punitive goal. (See Manocchio v. Kusserow, 961 F.2d 1539, 1542 (11th Cir. 1992) (exclusion of physician from participation in medicare programs because of criminal conviction is remedial, not punitive).) Supporting the remedial character of debarment is a statement by Senator Hatch in the Congressional Record of April 10, 1992, at S 5616, ``* * * [t]he legislation * * * provides a much-needed remedy for the blatant fraud and corruption uncovered in the generic drug industry * * * during the last 3 years.''
The Supreme Court has long held that statutes that deny future privileges to convicted offenders because of their previous criminal activities in order to insure against corruption in specified areas do not impose penalties for past conduct and, therefore, do not violate the ex post facto prohibitions. (See, e.g., Hawker v. New York, 170 U.S. 189, 190 (1898) (physician barred from practicing medicine for a prior felony conviction); DeVeau v. Braisted, 373 U.S. 154 (1960) (convicted felon's exclusion from employment as officer of waterfront union is not a violation of the ex post facto clause).)
In DeVeau, the court upheld a law that prohibited a convicted felon from employment as an officer in a waterfront union. The purpose of the law was to remedy the past corruption and to insure against future corruption in the waterfront unions. The court in DeVeau, 363 U.S. at 160, stated:
The question in each case where unpleasant consequences are brought to bear upon an individual for prior conduct, is whether the legislative aim was to punish that individual for past activity, or whether the restriction of the individual comes about as a relevant incident to a regulation of a present situation, such as the proper qualifications for a profession * * * .
As in DeVeau, the legislative purpose of the relevant statute is to ensure that fraud and corruption are eliminated from the drug industry. The restrictions placed on individuals convicted of a felony under Federal law are not intended as punishment but are ``incident to a regulation of a present situation'' (DeVeau, 363 U.S. at 160) and necessary in order to remedy the past fraud and corruption in the industry.
In another argument, Dr. Shah claims that the proposal to debar him under section 306(a)(2) of the act violates the double jeopardy clause of the Fifth Amendment to the U.S. Constitution. The double jeopardy clause states that no person shall ``be subject for the same offense to be twice put in jeopardy of life or limb.'' Dr. Shah relies on U.S. v. Halper, 490 U.S. 435 (1989), to argue that the Fifth Amendment double jeopardy clause should prevent his debarment because ``jeopardy'' can attach even in a purely civil proceeding, so long as the civil sanction is punitive, not remedial. He further argues that his proposed permanent debarment is punitive because (1) it is permanent and without regard to whether Dr. Shah represents a continuing threat to the integrity of the drug testing, approval, or regulatory processes; (2) it precludes his providing services in any capacity to a company whose products are subject to FDA approval, regardless of whether or not the service relates to drug testing, approval, or regulation; (3) it can be terminated only for substantial assistance to prosecutors and not when the threat to public safety is eliminated; and (4) it arises out of the mere fact of conviction and precludes factfinding into whether a risk to the public exists.
Dr. Shah's arguments are unpersuasive. First, ``jeopardy'' cannot attach because the effect of section 306(a)(2) of the act is remedial, not punitive. As discussed above, the legislative goal of this section is to restore and ensure the integrity of the drug approval process and to protect the public health by eradicating fraud and corruption from the drug industry. This is plainly a remedial rather than punitive goal. (Manocchio v. Kusserow, 961 F.2d at 1542.)
The fact that Dr. Shah's debarment is permanent rather than temporary does not signify that the legislation is nonremedial or punitive. The Supreme Court has upheld laws which, for remedial purposes, permanently bar a class or group of individuals from certain occupations due to a prior criminal conviction. (See Hawker v. New York, 170 U.S. 189, 190 (1898); DeVeau v. Braisted, 373 U.S. 154 (1960).) Additionally, these cases support the fact that Dr. Shah's debarment can arise only because of his conviction, which Dr. Shah argues is punitive.
Dr. Shah's conduct, which has been shown to relate to the development, approval, and regulation of a drug product, establishes the potential for future violations by Dr. Shah that undermine the integrity of the drug approval and regulatory process. The act precludes Dr. Shah's providing any type of service to holders of drug product applications because of this possibility of future violations. Congress proscribed all services in order to avoid the serious administrative difficulties involved in distinguishing between those positions clearly related to drug regulation from those not clearly related. Such a proscription for this reason is permissible. Siegel v. Lyng, 851 F.2d 412, 416 (D.C. Cir. 1988.)
Dr. Shah's assertion that the special termination provision is punitive is unpersuasive. In fact, the provision advances the remedial objective of ensuring the safety and efficacy of the country's drug supply. The cooperation fostered by this special termination provision enables FDA to eliminate from the drug industry many actors who are corrupting the industry, endangering the public health, and destroying consumers' confidence in the Nation's drug supply. Convictions based on debarred persons' assistance can form the basis for other debarments if the terms of the act are satisfied, which further serves the act's remedial objectives.
An individual's debarment will not be terminated if FDA finds that the remedial intent of the act will be undermined by such termination. The act does not guarantee termination of debarment to those who are debarred. The power to terminate debarment is discretionary with FDA, and the agency is bound by the provision's terms to exercise this authority in a manner consistent with the interest of justice and protection of the integrity of the drug approval process (21 U.S.C. 335a(d)(4)(D)).
Due to the potentially serious consequences to the public health of fraud and corruption in the drug industry, the permanent debarment of convicted felons like Dr. Shah is not an excessive means to eliminate fraud from the industry. The legislative history of the GDEA is replete with statements, some cited above, that the act provides a reasonable means of ridding the drug industry of widespread corruption and to restore consumer confidence in generic drugs.
In his final argument, Dr. Shah claims that his debarment violates the due process clause of the U.S. Constitution because it bears no rational relationship to any legitimate purpose. He asserts that his conduct does not automatically demonstrate a likelihood of future violations under the act. He also contends that debarment precludes providing services regardless of whether such service bears any relationship to the development, approval, or regulation of a drug product.
Dr. Shah's claims are unpersuasive. Dr. Shah fails to demonstrate that this debarment is unrelated to any legitimate purpose. Although his conduct does not automatically establish a likelihood of future violations, it does reveal the possibility of future violations. Debarment guards against future violations by prohibiting individuals ``from providing services in any capacity to a person that has an approved or pending drug product application'' in order to meet the legitimate regulatory purpose of restoring the integrity of the drug approval and regulatory process and protecting the public health. Dr. Shah acknowledges that protecting the public health is a legitimate purpose. As mentioned above, Congress can appropriately achieve this purpose by proscribing ``all services'' due to the serious administrative difficulties involved in distinguishing between those positions clearly related to drug regulation from those not clearly related. These difficulties would include the problem of ascertaining the exact nature of the employee's relationship with the employer as well as defining what constitutes a sufficient nexus with the regulatory scheme under all circumstances.
Dr. Shah's claim that FDA's refusal to grant a hearing in his case would violate procedural due process is inaccurate. Dr. Shah acknowledges that he was convicted as alleged by FDA and has raised no genuine and substantial issue of fact regarding his conviction. The facts underlying Dr. Shah's conviction have been established by his conviction, and, therefore, are not at issue. While Dr. Shah's legal arguments do not create a basis for a hearing, FDA has considered these arguments before taking final action and has found them unpersuasive. Accordingly, the Interim Deputy Commissioner for Operations denies Dr. Shah's request for a hearing.
Therefore, the Interim Deputy Commissioner for Operations, under section 306(a) of the act, and under authority delegated to her (21 CFR 5.20) finds that Dr. Atul Shah has been convicted of a felony under Federal law for conduct: (1) relating to the development or approval, including the process for development or approval, of a drug product (21 U.S.C. 335a(a)(2)(A)); and (2) relating to the regulation of a drug product (21 U.S.C. 335a(a)(2)(B)).
As a result of the foregoing findings, Dr. Atul Shah is permanently debarred from providing services in any capacity to a person with an approved or pending drug product application under section 505, 507, 512, or 802 of the act (21 U.S.C. 355, 357, 360b, or 382), or under section 351 of the Public Health Service Act (42 U.S.C. 262), effective December 5, 1994. (21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(ii) and 21 U.S.C. 321(ee)).
Any person with an approved or pending drug product application who knowingly uses the services of Dr. Shah in any capacity, during his period of debarment, will be subject to civil money penalties (21 U.S.C. 335b(a)(6)). If Dr. Shah, during his period of debarment, provides services in any capacity to a person with an approved or pending drug product application, he will be subject to civil money penalties (21 U.S.C. 335b(a)(7)). In addition, FDA will not accept or review any abbreviated new drug application or abbreviated antibiotic drug application submitted by or with Dr. Shah's assistance during his period of debarment.
Dr. Shah may file an application to attempt to terminate his debarment pursuant to section 306(d)(4)(A) of the act. Any such application would be reviewed under the criteria and processes set forth in section 306(d)(4)(C) and (d)(4)(D) of the act. Such an application should be identified with Docket No. 93N-0252 and sent to the Dockets Management Branch (address above). All such submissions are to be filed in four copies. The public availability of information in these submissions is governed by 21 CFR 10.20(j). Publicly available submissions may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday.
Dated: November 21, 1994.
Linda A. Suydam,
Interim Deputy Commissioner for Operations.
[FR Doc. 94-29768 Filed 12-2-94; 8:45 am]
BILLING CODE 4160-01-F